Role of Principles for Responsible Investment in Strengthening Institutional Investors and Its Influ

Abstract

This research investigates the relationship between climate change disclosure and institutional investors from the perspective of the stakeholder salience theory (Mitchell1997) with particular focus on institutional investors' signing the Principles for Responsible Investment (PRI). Using dataset of 11,862 firm-year from Japan, the empirical results of this paper provide evidence for the following: First, institutional stakeholders' holding ratio has a positive influence on corporate climate change disclosure (power). Second, the the positive influence of the institutional investors is greater when at least 1% of the total share was held by PRI signed institutional investors (legitimacy). Third, the aforementioned relations gained statistical significance gradually during the period of the analysis (urgency). Thus, this research explores contemporary arena for stakeholder salience theory, and addresses the question of whether one of the PRI's goals pertaining to disclosure is realized.